Federal Appeals Court Affirms Restitution Order for STOLI Investors

Federal Appeals Court Affirms Restitution Order for STOLI Investors

A victim of a crime “may not be denied restitution simply because the victim had greedy or dishonest motives, so long as the victim’s intentions were not in pari materia with” the criminal defendant who had been convicted of crimes relating to a stranger-originated life insurance (STOLI) scheme.

That’s the way this JD Supra writer put it, describing a decision last month from the Second Circuit Court of Appeals to affirm an order of restitution in U.S. v. Quatrella, 17-1786-cr, 2018 U.S. App. LEXIS 3189 (2d Cir. Feb. 9, 2018), where the criminal defendant had pled guilty to insurance fraud.  The federal appellate court said that the criminal defendant’s friends had invested in the STOLI scheme without being knowing participants in the crime, and therefore the federal district court was correct in concluding that they were victims under the Mandatory Victims Restitution Act.  The district court had ordered $1.9 million in restitution be paid to these victims, who had intervened.

The JD Supra article, “Lengthy summary order affirms an order of restitution”, is available here.  An article from Mealey’s, “2nd Circuit Finds Investors To STOLI Policies Were Victims, Affirms Restitution”, is available here.  The Second Circuit’s decision is available here.

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